TMI Blog2012 (10) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/PN/2009 - - - Dated:- 31-10-2012 - Shailendra Kumar Yadav (Judicial Member) And G. S. Pannu (Accountant Member) For the Petitioner : Mukesh Patel, R. S. Mehta For the Respondent : Ann Kapthuama ORDER Shailendra Kumar Yadav (Judicial Member) This appeal of the assessee is against the order of the CIT(A)-I, Pune, for the assessment year 2006-07. The grounds raised by the assessee are as under: 1. Learned CIT(A) erred in law and on facts in confirming the addition of ₹ 10,23,042/- as the taxable amount of Fringe Benefits to the amount of Fringe Benefits declared by the appellant in his return of FBT. 2. Learned CIT(A) erred in not appreciating that Fringe Benefit Tax is not liable to be paid by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained in the Budget Speech in the Explanatory Notes. 2. The entire dispute in this appeal relates to the manner in which the assessee s liability to pay Fringe Benefit Tax (in short FBT ) as per section 115WA of the Act is liable to be computed. 3. The contention of the assessee is that the levy of FBT is to be confined to the expenses incurred on persons who are in employment of the assessee and not with respect to expenses incurred on persons who are not employees of the assessee company. In this regard, as per the assessee, the lower authorities have ignored the provisions of section 115WA of the Act which, according to the appellant, confines the chargeability of FBT in respect of fringe benefits provided or deemed to have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the value of the fringe benefits provided or deemed to have been provided by an employer to his employees during the relevant previous year. Section 115WB of the Act elucidates the fringe benefits which are liable for charge of FBT as prescribed in section 115WA of the Act. Sub-section (1) of section 115WB prescribes that For the purposes of this Chapter, fringe benefits means any consideration for employment provided by way of------ . The presence of the expression any consideration for employment is significant in section 115WB(1), inasmuch as the benefits by way of clauses (a) to (d) listed therein are directed towards the employees or their families including former employees. Subsection (2) of section 115WB, which is the focus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for employment . The presence of the aforesaid expression means that the fringe benefits covered in section 115WB(1) are those which are in consideration for employment. Now, section 115WB(2) contains fringe benefits which are deemed to have been provided by the employer to the employees. Section 115WB(2) does not contain the expression . means any consideration for employment as contained in sub-section (1) of section 115WB, and therefore, it is sought to be canvassed by the Revenue that any payment made by an assessee for the purposes contained in Clauses (A) to (Q) of subsection (2) of section 115WB shall result in fringe benefits deemed to have been provided by the employer to his employees. In other words, as per the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tensibly, the clarification issued by the CBDT vide Question No. 14 in Circular No. 8 of 2005 (supra) seeks to enlarge the scope of levy of FBT, which is not supported by the language of the statute. The Hon ble Supreme Court in the case of Kerala Financial Corporation v. CIT 210 ITR 129 (SC) has clearly opined that the Circulars issued by CBDT cannot override the provisions of the Act. In any case, it is quite well-settled that an executive instruction/circular cannot create any additional liability on the assessee. Secondly, it is also to be appreciated that the stand of the Revenue is also not in consonance with the legislative intent. The import and intent of introducing Chapter XII-H was to tax such benefits which are collectively enjo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are incurred on employees or their family members but in the present case, as mentioned on page No.5 of the paper book, the entertainment expenses have been incurred for guests of the company, which has not been disputed by the Revenue. So same are not liable to be subjected to provisions of section 115WB(2) of the Act. The next issue is with regard to sales promotion of ₹ 35,06,333/- and gifts of ₹ 3,70,334/-. In this case, expenditure has been incurred on food of H.O., but it does not tell the details whether same has been incurred on food of guests or employees in the course of employment. So, that has to be looked into by the Assessing Officer under the provisions of section 115WB(2) after providing due opportunity of hea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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